After 11 years as CEO, Palmer looks back on her successes and forward to the future, including the acquisition of AV Homes
Builder and Developer: What steps has Taylor Morrison been taking to keep up in an increasingly green, environmentally friendly building market?
Sheryl Palmer: Taylor Morrison’s Elem3nts program relies on the nationally recognized Home Energy Rating System (HERS) to help homebuyers understand the energy efficiency of our homes. A standard new home typically scores around 100, while a Taylor Morrison home receives a HERS rating in the 60 or 70s. On the HERS scale, the lower the number, the better.
BD: What trends in outdoor living have you been incorporating into Taylor Morrison homes?
SP: Outdoor living is becoming just as import- ant as indoor. According to our 2017 consumer survey conducted by Wakefield Research, recent and prospective homebuyers are craving green space. 56 percent of homebuyers surveyed would be willing to sacrifice a larger house to obtain a bigger yard.
The survey also found the most important exterior feature of a home is distance from neighboring homes. Both millennials (48 percent) and non-millennials (53 percent) believe this breathing room is key, beating other curb appeal elements such as siding, driveway styles, exterior paint color, and roofing finishes.
Demand for more elaborate exterior space continues to rise, and blending indoor-outdoor living to address customer preferences is critical to our success. At a time when land prices are escalating and local approvals can force smaller lot sizes, Taylor Morrison creatively maximizes limited areas—especially in urban locations— making the entire living experience that much more enjoyable.
Features such as outdoor living rooms, floor-to-ceiling retractable glass walls that open to the backyard, and matching tile flooring that extends from a home’s interior to its exterior help to create a seamless flow in today’s outdoor-oriented homes.
Taylor Morrison shopper surveys also reveal an increasing desire for enjoying the backyard. When asked what home shoppers would spend an extra $10,000 to $15,000 on in their new homes, outdoor living items topped the list over features such as upgraded cabinets and kitchen islands.
Outdoor living is no longer an afterthought to a home’s construction. In some of our largest markets, we have introduced nine new floor plan series, all of which meet the blended indoor-outdoor living trend head-on.
BD: You recently announced the exciting acquisition of AV Homes. Can you give us any details about how this addition will affect Taylor Morrison?
SP: Highlights of Taylor Morrison’s definitive merger agreement to acquire AV Homes include growing the affordable active adult product offerings in Orlando, Phoenix, and Raleigh to complement existing Taylor Morrison communities, expansion into the more affordable, first-time buyer segment, and a significant increase in scale and market share in five major housing markets.
The joining of Taylor Morrison and AV Homes supports our strategic growth priority by bringing us deeper into five of our current markets, adding Jacksonville to the portfolio, and expanding our offerings in the affordable first-time buyer and active adult consumer segments. This transaction, subject to customary closing conditions, will serve as a means to further enhance our land pipeline in the right locations, potentially offsetting some future land purchases, while simultaneously delivering land to our homebuilding operations with mature communities. What’s more, we believe the commonalities in product offerings and consumer groups will create opportunities for scale efficiencies and enhance our national footprint, while creating top and bottom-line performance improvement.
BD: You have been the CEO of Taylor Morrison for over 11 years. What have been your biggest challenges during this time?
SP: Rising costs and consumer affordability. The labor market is tight, especially among our trades, and commodity costs have been on the rise. We’re challenged to control our direct costs so we can deliver homes that our customers can afford to purchase or rent. To counter these challenges, we’re leveraging our advantages as an all-cash builder to negotiate and lock in pricing and pay our trades more quickly.
BD: What’s next for Taylor Morrison?
SP: At the start of 2018 we outlined three strategic priorities: pursuing strategic growth opportunities to deliver benefits of scale; enhancing operational excellence to drive company-wide efficiencies; and differentiating the customer experience Taylor Morrison provides all team members and homebuyers.